How Upsell Funnels Are Like Printing Free Money

Keith Perhac
Founder @ SegMetrics

As a marketer, you have a bucket list of tactics to try — things that you’ll get to one day. The challenge is which tactics will be the most effective, with the least effort. The proverbial “low-hanging fruit.”

You know that in order for a business to thrive, it needs to sell more than one thing to each customer… maybe you’ve even tried to do just that. Or maybe you haven’t even thought about it before.

In either case, there’s a good chance you’re leaving money on the table.

That’s because the truth is acquiring a new customer is hard (and expensive). So wouldn’t it be nice if it was possible to sell them more than one thing at a time, without chasing customers away?

Fortunately, it is — in fact, that’s what upsell funnels are all about.

What is an Upsell Funnel?

When most people hear the word “upsell” they probably think of a McDonald’s drive-thru cashier saying, “Do you want fries with that?”

That line has undoubtedly made McDonald’s billions of dollars, but that’s what we’d call a pre-purchase upsell. For course authors, product creators, and self-funded businesses, trying to sneak in an extra product before you’ve closed the deal may lead a prospect to hold off on clicking “buy.”

So, for these kinds of businesses, what I recommend instead is a post-purchase upsell.

A post-purchase upsell funnel happens after the prospect has already completed their transaction… after they have already paid. This allows you to avoid discouraging them from purchasing that first product, while still creating an opportunity to increase the value of the sale.

Let’s look at an example.

John has been scoping out an online course about learning to launch a podcast. He’s decided to take the plunge, and purchase a course from (a fictional site, made up entirely for the purpose of this example).

He adds the course to his cart and goes through the process of checking out. After entering his credit card information and clicking buy, he’s greeted with a thank you page — and beneath a message that says “Thank you for purchasing Launch a Podcast in 30 days” is a note asking him if he’d like to add on a package of 6 interviews with professional podcasters, each making $5,000 or more from podcasting each month — a series full of tips and best practices to help new podcasts do the same, which usually sells for $250 or more — for an additional $100.

That is a post purchase upsell funnel. And when done correctly, it’s a bit like printing free money. In fact, on average, they generally increase revenue by around 30%.

So let’s take a look at why they work.

Using Psychology to Make a Second Sale

I’m fond of saying that Marketing is just applied Psychology. So let’s look at the psychology of WHY post-purchase upsells work so well.

Imagine for a minute that someone knocked on your door and asked you to place a large, gaudy sign reading “Drive Carefully” in your front yard, practically blocking your house. You’d probably laugh in their face — you might even slam the door.

Yet in the mid-1960s, psychologists Jonathan Freedman and Scott Fraser did an experiment that led 76% of homeowners included in the study to agree to exactly that. The experiment was designed to look at what most salespeople consider “getting a foot in the door” and what is more properly known as the consistency principle.

The concept is simple enough: people want to make decisions that are consistent with the decisions they’ve made in the past.

Robert Cialdini talks about the concept in some length in his book, Influence: The Psychology of Persuasion. We try to be consistent because doing so is a survival skill — it gives us a helpful shortcut. We think about something once, and then never have to think about it again.

Which means that when the consistency principle is triggered, decisions are made almost automatically.

So, how did Freedman and Fraser get 76% of homeowners in their experiment to agree to have a large sign placed in their yard?

They had a volunteer stop by a few weeks before making the request and asked those same homeowners to display a smaller, three-inch sign that read “Be a Safe Driver.”

And, in case you’re thinking people back then were just more willing to do things for the greater good than folks are today, there’s one more fact that I’ve left out.

Like any good experiment, Freedman and Fraser also had a control group. For this second group of homeowners, they only made the second request — going straight for the larger ask of the billboard in their front lawn. Their success rate? A much smaller 17%.

I think you’ll agree that that’s a pretty dramatic difference… and that the consistency principle is a pretty powerful tool.

Getting to Yes: Using Consistency In Your Upsell Funnel to Get More Sales

Of course, putting the consistency principle to work for you, and creating a successful upsell funnel isn’t quite as simple as just slapping up another product and calling it done.

As with all things in life, there are some things that are more effective than others. In my experience, there are three post funnel upsell concepts that work best.

Upgrade at a Discount

Like in our example above about the podcasting course, this type of post-purchase upsell offers another package or product that provides additional value at a discounted rate.

That discount is directly tied to the customer having just made a previous purchase — so you might use language like, “As our thank you to you, we’d like to offer you a discount on…” and then name the item you’re offering as an upsell.

This is the same strategy as the “Super-Size” strategy used at McDonalds in the 90s. For a LOW, LOW price, you can get even more!

Upsell a Subscription

In this type of upsell funnel, the customer purchases a product (or maybe a few products), and you offer them a recurring supply of goods or services for a monthly fee.

Think buying a printer, and having the manufacturer offer to send you ink anytime you run out, if you pay them a few dollars a month for a subscription service. This is also common with products like dog food… but it’s not limited to physical goods.

For those with online courses, this may be access to a forum, a mastermind, or weekly “office hours” where they can ask you questions live.

Selling a Secondary (Related) Products

Finally, the third option for a post-purchase upsell funnel is to offer a related product at its usual price… and that price does not necessarily have to be lower than the price of that first purchase.

You might try to upsell them to a higher level of the course they just purchased, or even sell them on a whole new course that serves a related need. The important thing here is to test your funnels, and use dollars as the key performance indicator (KPI).

One of the most surprising things is that the upsell product doesn’t necessarily need to be cheaper than the original product. In fact, we’ve seen that offering a $1,000 product as an upsell on a $300 purchase can actually bring in MORE revenue than going with a cheaper product.

After all, if you use a $1,000 product as your upsell item, and sell 4 of them in a month that’s more profitable than if you use a $50 product as your upsell item and sell 15.

Getting to Yes — Again and Again.

Finally, I want to leave you with the idea that a post-purchase upsell funnel isn’t limited to 2 steps. If a shopper says yes, and then says yes again, why not ask a third time?

That said, if they say no twice in a row, I usually recommend sending them to a final thank you page without another product. More than that and they’re likely to leave the site… and we’d much rather they stick around and leave the door open for more sales later on.

What are some great Upsell Strategies that you’ve seen, or implemented, in the past? I’d love to hear about them! Let me know in the comments below.

Keith Perhac

Founder @ SegMetrics

Keith is the Founder of SegMetrics, and has spent the last decade working on optimizing marketing funnels and nurture campaigns.

SegMetrics was born out of a frustration with how impossibly hard it is to pull trustworthy, complete and actionable data out of his client's marketing tools.

Related Articles